Captains of Industry Hijack Yacht Race

SAN FRANCISCO ( TheStreet) -- The 33rd America's Cup concluded with a CEO navigating the winning vessel, one of the world's richest men steering the loser and a decorated skipper in yachting history winning titles with his third different country.

This is boardroom yachting, and the shareholders are divesting.

Oracle BMW's carbon-composite racer took 150,000 hours to build and $20 million to buy.

Within the past decade, a sport historically in the purview of the elite has become almost exclusively the domain of corporations -- with Oracle ( ORCL) Chief Executive Larry Ellison spending an estimated $200 million to help his Oracle BMW ( BMW) USA-17 trimaran bring home this year's America's Cup. That nears the $280 million organizing budget that Tom Cannon, a professor of sports business at Liverpool University, estimated was spent for the entire 2007 America's Cup when he studied its impact for Allianz ( AZ). At that time, the America's Cup brought in roughly $8 billion in revenue, which was more than that year's Super Bowl and World Series combined and third only to the Olympics ($13 billion) and FIFA World Cup ($10.5 billion).

Ordinarily, this would be a great opportunity for Ellison, Oracle, BMW and race suppliers like Coca-Cola ( KO) and Ford ( F) to bask in the spotlight, but an intense, high-stakes competition made this all but impossible. Ellison's seafaring rival -- Ernesto Bertarelli, a Swiss-Italian pharmaceutical heir worth about $8.2 billion -- spent nearly as much building his Alinghi 5 catamaran and fighting Ellison in court over who the challenger should be, where and when the races should be held, how the boats should be constructed and even what the rules of the match should be. This delayed the race by nearly a year, prompting longtime sponsor Louis Vuitton ( LVMH) to ditch its qualifying races for a "Pacific Series" in New Zealand featuring teams in borrowed boats and almost no television coverage.

Other sponsors, like Royal Bank of Scotland ( RBS), also lost interest in the squabbling over "rigid wing sails" and boat origins and jumped ship. As a result, the budget for this year's contest shrunk to roughly $11 million. You could blame Bertarelli for changing the rules governing crew members' nationalities before racing Italy's Prada team in 2003, bringing a maritime trophy to a landlocked nation and basically making the cup a meet-up of international mercenaries. You can blame Ellison for picking up Bertarelli's former skipper, New Zealand's Russell Coutts, as a free agent and driving up the already astronomical price of yachts with his more than $20 million three-hulled beast.

The main reason the rules laid out in the America's Cup Deed of Gift document have gone through more interpretations within the last year than a religious text, however, has less to do with the infusion of corporate money and billionaire pride than it does with the billions at stake. As Ellison weighs offers from San Francisco (home of his Golden Gate Yacht Club), San Diego and Newport, R.I., to host the next world cup, Cannon says the event could generate $4 billion to $6 billion for each city.

That kind of capital is enough to bring sponsors back into the game, as evidenced by the lesser-known Whitbread round the World Race. Started in 1973, with three sailors lost in the inaugural contest, the event was held once every four years until it was eventually rebranded the Volvo ( VOLVB) Ocean Race in 2001. The event went to 12 cities during its 2008-2009 campaign and drew sponsors including Inmarsat ( ISAT), Michelin ( ML), Puma ( PUMG) and Ericsson ( ERIC). Like the America's Cup, each stop is an opportunity for these companies to plan parties for and play to the captive demographic of nearly 200,000 luxury-minded earners in the gallery seats.

If the America's Cup wants to catch its wind again, it will need to make some executive decisions about agreeing on rules with the next race's challengers, expanding its television reach beyond current agreements with ESPN, Sky and other global networks and regaining the trust of its sponsors. Even with a CEO at the helm, that's some rough water ahead.

-- Reported by Jason Notte in Boston.

Jason Notte is a reporter for TheStreet.com. His writing has appeared in The New York Times, The Huffington Post, Esquire.com, Time Out New York, The Boston Herald, The Boston Phoenix, Metro newspaper and the Colorado Springs Independent.

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